A lot of people new to Spain and its different legal and business practices are often quite confused as to the exact differences between the two main company types: the S.L. and the S.A. The convenience of either one can vary depending on your own personal circumstances, the nature of your clients and your longer term vision for doing business in Spain. The following is a brief summary of some of the more important differences between the two which should be borne in mind before deciding on one or the other.
In practice, the S.A. (Public Limited Company) and the S.L. (Private Liability Company) are very similar although there are certain instances where the control requirements for an S.L. are less rigorous. Some examples of these are as follows:
(i) In the case in which the incorporation of the S.L. is carried out, fully or partially, by means of a capital contribution in kind (e.g. the contribution of furniture, electronic equipment etc.), the value of such does not require an independent surveyor appointed by the Commercial Registry as is the case with an S.A.. The same will apply with respect to contributions in kind made in the case of a capital increase.
(ii) In the case of capital increased through the off-setting of loans, there is no need to obtain an auditor’s certificate for an S.L., whereas such a certificate is necessary for an S.A.
(iii) In the case of an S.A., certain resolutions which imply amendment of the by-laws (e.g. change of name, registered office, corporate purpose, etc.) must be announced in the press, whereas in the case of an S.L. such announcements are not required.
(iv) The calling of shareholders’ meetings in an S.A. must necessarily be made through announcements in the press and the Official Gazette of the Commercial Registry, unless the meeting is held as “universal” (i.e. with attendance of all the shareholders). Such announcements are not required in an S.L. and calls of partners’ meetings can be made by mail if so established in the by-laws of the company.
Apart from these examples, it should also be borne in mind that the S.A. requires a higher minimum capital than the S.L. (60,101.21 as opposed to 3,005.06 ).
In summary, you might consider that the S.L. is more designed for smaller, more family run enterprises (shops, bars, restaurants etc) whereas the S.A with its more stringent administrative control and its higher capital requirement are more suited to the larger multi-national-type corporation.